State Supreme Court sides with developer on improvement fees

The ruling could potentially lower the cost of new housing statewide because such fees are common in Minnesota. It was hailed as “a landmark victory for housing affordability” by the Builders Association of the Twin Cities.

In 2015, New Brighton-based developer Martin Harstad wanted to build a 183-home development called Bailey Park in Woodbury. But the city said he would need to pay a nearly $1.4 million fee for future improvements on roads that were not on his property. That fee would have added an average of about $7,000 to the price of each unit, Harstad said.

Roy Stefonowicz, one of Harstad’s attorneys, said his client was “thrilled” by the ruling.

“He has long contended that the city’s fee was illegal and unenforceable, so it was very fulfilling to have the Minnesota Supreme Court affirm that in its decision,” Stefonowicz said.

The planned Bailey Park development has been in limbo since January 2016, and Harstad is considering his options following the court ruling, his attorney said.

The fees are commonplace in Minnesota. Cities have levied the fees on developers, arguing that they are responsible for increased traffic generated by their new homes — even if the road improvements are not on their property.

In response to the Aug. 15 decision, Woodbury spokesperson Jason Egerstrom said: “We appreciate the clarity provided by the court. We are interpreting the decision, gathering information and evaluating our next steps. We look forward to working with the building and development community to provide high-quality neighborhoods, while ensuring development costs will not be borne solely by the city’s taxpayers.”

Hannah Black is a graduate of the Missouri School of Journalism interested in the intersection of politics and the everyday lives of citizens. Outside of reporting, she enjoys running, going to museums and concerts, and trying new coffee shops and breweries. Her favorite thing to do is spend time with her dog, Wendell.